The Filipino president has given the go-ahead to the merger of state run banks Land Bank of the Philippines and Development Bank of the Philippines (DBP), which will create the country’s second largest lender in terms of assets.

The merger has been done to eliminate the overlap between their functions. Land Bank will be the surviving entity in the merger.

The combined entity is expected to comprise assets of PHP1.61 trillion ($33.5bn), just behind the country’s largest lender BDO Unibank that manages total assets of PHP1.88 trillion.

The President’s nod comes as both chambers of Congress failed to act on bills to integrate the two banks.

The merger is now subject to approval from the Philippine Deposit Insurance and the central bank.

President Benigno Aquino III said: "The merger of DBP and Land Bank will build a stronger and more competitive universal development bank able to fulfill its mandate of providing banking services to propel countryside development and to contribute to sustainable and inclusive growth."